Brazilian water utility Sabesp to raise nearly US$170mn

Brazil’s largest water utility, state-owned Sabesp, is planning to raise 932mn reais (US$167mn) to fund various renovation, upgrade and expansion projects aimed at bettering its coverage in São Paulo and the state’s coastal areas.

Approximately 22 cities and 1.4 million people will be direct beneficiaries of the new projects that include the construction of new water and sewage systems. This was revealed by the regional development ministry said in its press release.

The completion date for the project is currently set at February 2026. Sabesp has received authorization from the regional development ministry to raise fresh capital through the issue of infrastructure debentures, which are a type of local bond.

To issue infrastructure debentures firms are required to obtain authorization from the federal government as this specific kind of fundraising involves offering participating investors tax exemptions.

“Between 2015 and 2018, when the issuance of [infrastructure] debentures began, around 1.5bn reais were raised. The administration [of President Jair Bolsonaro] in almost three years, practically quadrupled this volume. From 2019 until now, 36 projects were authorized by the ministry to raise a total of 5.5bn reais,” said regional development minister Rogério Marinho.